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Intake of permanent migrants

When we open up, open up big: economists say we need more migrants





Wes Mountain/The Conversation, CC BY-ND

Peter Martin, Crawford School of Public Policy, Australian National University

Australia’s leading economists have overwhelmingly endorsed a return to the highest immigration intake on record, saying Australia should aim for at least 190,000 migrants per year as it opens its borders, up from the target of 160,000 per year set ahead of COVID.

More than a third of those surveyed believe 190,000 isn’t enough, arguing that a “catch up” will show Australia is open to the world.





Economic Society of Australia/The Conversation, CC BY-ND

Prime Minister Scott Morrison cut Australia’s migration ceiling from 190,000 to 160,000 places per year in March 2019, in order to “tackle the impact of increasing population in congested cities”.

The 49 economists who took part in the Economics Society of Australia poll were selected by their peers for their expertise in macroeconomics, microeconomics and economic modelling. One is a member of the Reserve Bank board.

Ahead of COVID, Australia’s permanent intake has only been as high as 190,000 on five occasions, during the five years 190,000 was the official target.


Annual migrant intake in the years leading up to COVID





Parliamentary Library 2021

The government’s intergenerational report released mid last year assumed a return to an intake of 190,000 per year in 2023-24.

Only four of the 49 economists surveyed by The Economic Society and The Conversation wanted less migration than Australia had going into COVID.

Their concerns were that growing population numbers put pressure on “fragile resources and infrastructure”. Slower population growth would “ease pressures on the environment, housing prices, infrastructure and emissions”.

Adelaide University labour market specialist Sue Richardson said there was no evidence high levels of migration raised GDP per person, as opposed to GDP.

Congestion and the environment matter

“In terms of living standards, it is the per capita measure that matters,” she said. “And it should be adjusted for increased traffic congestion, urban density and pressures on the health and other important social systems.”

The six economists who thought an annual intake of 160,000 was about right made the point that what mattered more was the composition of the intake. There should be less unskilled migration, more skilled migration and a “decent humanitarian program”.

The 19 economists who went for 190,000 argued less would show a “lack of ambition” for lifting economic growth.

Helen Silver, chief general manager at Allianz Australia and a former head of Victoria’s Department of Premier and Cabinet said a higher target would be both a “catch up” and would act to symbolise Australia was more open to the world.

Australia benefits from being open

Any target would need to be flexible and responsive to the capacity of Australia’s heath and other systems given the ongoing pandemic.

Melbourne University economist John Freebairn said a larger population would enable Australia to capture economies of scale and fill gaps in high skill and low skill jobs caused by labour market rigidities and failures in training systems.

It would increase the government’s tax take net of spending and help build a more dynamic and interesting society, as it had in the past.

The 18 economists (37.5% of the total) who said 190,000 was not enough argued that Australia’s status as a nation of immigrants gave it a formidable advantage.

190,000 could be considered a floor

UNSW economist Gigi Foster said in the wake of Australia’s responses to COVID its challenge was not so much what target to set, but rather how to convince immigrants to come here.

Melbourne University ‘s Chris Edmond said if Australia had the same per capita target as Canada it would have a permanent intake of 250,000 per year.

The University of Sydney’s James Morely said 190,000 was less than 1% of the population and was in any event not a target for net migration as that would be determined by the number of Australians who left and returned, and the number who came in temporarily under other schemes.

Given low birth rates and a need for a balanced age profile Australia should probably target permanent visas of 320,000 - 1.25% of the current population.

 

RMIT’s Leonora Risse said what mattered was that the migration intake was accompanied by policies designed to ensure migrants reached their potential.

When considering an upper limit on migration, we should keep in mind that 30% of all Australians were born overseas. For 20% of Australians, one or both parents were born overseas. Australia would not be what it was were it not for migration.

Notably absent from most of the 49 responses was discussion of the impact of migration on wages and the employment of locals.

The experts surveyed seemed to regard these impacts as not particularly big in either direction compared to the impacts of migration on dynamism, Australia’s place in the world, and its environment, infrastructure and social cohesion.


Detailed responses:

The Conversation

 

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.


Responses (47)


 

Peter Abelson

.

160,000 is about right

This is a deep question with many impacts on our economy and community. I think that 160,000 is sufficient for a positive economic impact. I have two reservations: 1. In the city likely to attract most migrants (Sydney), much of the city already experiences high to extreme traffic congestion and increasing amenity challenges with high residential densities. Housing an extra 40,000 residents a year is a challenge. 2. I would prefer refugees to make up a higher proportion of our immigrants. Their needs are greater, often much greater. Of course, this is principally a social view, not an economic one, though many refugees may be quite productive.


 

Garry Barrett

.

190,000 is about right


 

Adrian Blundell-Wignall

.

190,000 is about right

160,000 maintains what has supported past trend growth, given birth and death rates. Continuing with 160,000 shows a lack of ambition and any vision for improving Australia's trend growth. 190,000 would be the policy of a government with an economic plan to improve Australia's performance.


 

Alison Booth

.

Less than 160,000

Tossing numbers around in this context is superficial. For this reason I have. checked the lowest numbers box. One cannot consider this topic without thinking also about what the optimal population levels should be for an arid country like Australia. We want not only to maintain our standard of living but also to prevent this continent being destroyed through environmental degradation. Growing population numbers puts pressure on fragile resources and infrastructure, and we need slow population growth to manage our fragile resources better - much better. (And at some point we may need to open our borders to refugees from Pacific Islands whose land is being inundated by rising sea levels.) In addition, why do we need population growth? Many smaller countries ? like some of those in Europe ? have managed to have high GDP growth rates with a static population, so it?s not clear why we need high population levels to increase growth. Increasing productivity and education levels might be alternative strategies. Other issues that should be considered before determining the number of permanent visas are net population flows ? immigration and emigration.


 

Robert Breunig

.

190,000 is about right

Selective immigration has been crucial for Australia's productivity and we should try and return to reasonable levels of migration. While keeping immigrants out gives a short-term boost to wages in Australia, it does so at the cost of productivity, growth and better prospects for Australian workers in the future.


 

Markus Brueckner

.

190,000 is not enough


 

Matthew Butlin

.

Less than 160,000

Slower population growth will ease pressures on the environment, housing prices, the demand for infrastructure and reducing carbon emissions.


 

Fabrizio Carmignani

.

190,000 is about right

The analysis in the intergenerational report shows the benefit of net migration inflows for the Australian economy (see Box 2.1 in particular) https://cdn.theconversation.com/static_files/files/2011/Extract__Intergenerational_Report.pdf I do not see an argument to reduce the intake of permanent migrants below 190,000 at this stage, so, it seems to me that we should stick to the plan to return to 190,000 in 2023-24.


 

Ken Clements

.

190,000 is about right


 

Deborah Cobb-Clark

.

190,000 is about right

The Australian labour market has the capacity at the moment to absorb a relatively large number of permanent migrants. At the same time, current labour shortages can also be filled with the return of temporary migrants (e.g. international students) now that borders are more open.


 

Brian Dollery

.

Less than 160,000

High migration puts downward pressure on real wages.


 

Uwe Dulleck

.

190,000 is not enough

I am not sure there is a definitive answer to this question. In the current situation my worry is more that with all the policy interventions we saw with the pandemic, net-migration may actually be negative - more recent Australians may consider to move closer to their country of origin, and potentially Australia becomes less attractive as a destination as the cost of geographic distance may be perceived as higher (after all, it may be the case that you cannot visit loved-ones as easily as we thought was normal before). If that is the case (more out-migration, less in-migration), getting this number right will be difficult. So, in that sense, the increase in this number may simply send a signal that Australia is looking for people to move here - that signal may help to get somewhere close to the net-migration we want to achieve. Without question, migration has always been an important driver of Australian growth.


 

Chris Edmond

.

190,000 is not enough

If we had per capita immigration at the same rate as Canada we would have a permanent migrant intake of about 250,000 people per year.


 

Craig Emerson

.

160,000 is about right

More important than the number is the composition of the intake. A high-skill intake but with a decent humanitarian program can help deal with skill shortages, lifting both participation and productivity, while a low-skill intake is more likely to depress the wages of low-skilled Australian workers.


 

ALLAN FELS

.

160,000 is about right


 

Gigi Foster

.

190,000 is not enough

Australia is a nation of immigrants, and that is a formidable advantage. Our economy and our society benefit enormously, in many dimensions that are not all captured in economic statistics, from the different thoughts, ways, and dreams of a myriad of people blending here from around the world. Pre-covid we were seeing tens of thousands of skilled immigrants with valuable human capital walk in every year to bolster our industries and enrich our communities. With the disaster of the past two years (including tanking of our immigration inflows) behind us, and a danger of Australian retreating into parochialism or even xenophobia due to the social divisions and restrictions that have featured in our covid policy responses, we have ground to make up over the next few years in order to back-fill our workforce and refresh our society with the alternative perspectives and challenging new ideas of immigrants. While working hard to increase our immigration inflows, the government should also set about creating a welcoming destination for them, without the threat of legislatively unjustified freedom restrictions, and with the goal not to see people of the same source country settling within enclaves, but of seeing immigrants settle and assimilate within the fabric of Australian society - a goal that is furthered by retaining a basic English language requirement and requiring immigrants to demonstrate a commitment to Australian values. Goodness knows we'll need all the help we can get in the coming years rebuilding our institutions so that they reflect those values. The challenge is not so much what numerical target to set, but rather, how to convince immigrants that it's appealing to come here, in spite of how our governments have behaved in the COVID era.


 

John Freebairn

.

190,000 is about right

Migration brings benefits and costs. If, as seems likely, we can assume historical migration levels approximately equated marginal benefits and costs, and the next few years will be similar to recent years, points to future migration levels about the same as recent years. The economic and social benefits of migration include several dimensions: a larger population and economy to capture economies of scale and scope; an approximate similar increase in labour demand and labour supply at the aggregate level, which at the same time helps fill gaps in particular high skill and low skill jobs (caused by labour market rigidities and failures in our human capital creation institutions); net budget contributions with taxes generated exceeding extra government outlays; a more dynamic and interesting multicultural society, and, support a broader migration package with a component for humanitarian migration as a global citizen. The costs of migration include: required additional investment by the private sector and by the public sector for a larger population; additional pressures on limited environment resources and amenity aggravated by somewhat ineffective and lagged policy.


 

Paul Frijters

.

190,000 is not enough

From Australia's point of view, the more high-skill migrants the better the next five years. Given the collapse of migration in 2020-2022 and the abysmal state of the own education system, I think Australia could easily let in 300,000 a year the next five to ten years. Of course, I dont expect so many skilled would want to come anymore after the public's treatment of Djokovic and the extremely high hurdles the last two years faced by those wanting to come to Australia or leave it. The brand has been seriously damaged I think. On top of getting a reputation for mindless authoritarianism, the economic downturn and conflict with China also makes Australia less attractive. Still, I do think Australia's interests lie in high migration numbers, so it should open the borders and make an effort to repair the brand.


 

Renee Fry-McKibbin

.

190,000 is not enough

The number of permanent migrants should be higher than the intergenerational report recommendation to make up for the shortfall of the last few years.


 

Lata Gangadharan

.

190,000 is not enough

In the coming years, a healthy number of migrants from diverse countries can be beneficial both for the economy and for society, particularly in the long run. Of course, local infrastructure would need to keep up with an increase in intake. The last couple of years has seen a decrease in migrants and the impacts of that are being felt in the labour market now (shortage of labour in many industries) and if this lasts, then the wellbeing of Australians will be at stake.


 

Ian Harper

.

190,000 is about right

Skilled migration is an important driver of productivity growth, which in turn drives wages growth. Raising the number of skilled migrants raises GDP but, more importantly, should also boost GDP per capita and living standards as productivity lifts. The limits to the number of migrants we can absorb are set by social factors and the rate of investment in infrastructure.


 

RICHARD HOLDEN

.

190,000 is about right


 

Guyonne Kalb

.

190,000 is not enough

There are two main reasons for thinking 190,000 is not enough. The first reason is that we have not only had less people coming in over the last two years, we have actually lost people who have migrated out of Australia. It is clear that our labour market is now very tight as a result for a range of occupations. We would therefore need to start by catching up, first letting in people who have been patiently waiting during the pandemic as well as attract new migrants. The required size of the combined group of "backlog" and new applicants is likely to be well over the annual pre-COVID intake, especially in the first two to three years. The second reason is that the Australian government's treatment of temporary student and work visa holders has shown little empathy with the difficulties that this group has found itself in during the COVID-19 crisis, and provided no support to this group. As a result, future migrants may be hesitant to come to Australia on temporary visa but may require access to permanent visa with the protections that these offer. Therefore a larger number of permanent visa per year may be needed if Australia wants to be able to attract enough skilled workers back to Australia. While I believe Australia will need to increase its migrant intake to ensure employers can hire the workers they need, at the same time the labour shortages are also an opportunity to up-skill young and disadvantaged Australians to enable them to fill some of these positions as well, and gain valuable work experience while competition for jobs is relatively low in the next few months to one or two years.


 

Michael Keane

.

190,000 is not enough


 

Michael Keating

.

190,000 is about right

I think the composition of the migrant intake is at least as important as the aggregate number. I am assuming that the proportion of skilled migrants will not change much. But i would like to see more refugees for humanitarian reasons.


 

Geoffrey Kingston

.

160,000 is about right

Immigration imparts dynamism to the economy, especially skilled immigration, but puts downward pressure on real wages, especially unskilled immigration. It also pressures shared amenities such as roads, beaches and parks. It?s a question of balance.


 

Michael KNOX

.

160,000 is about right

The RBA has suggested that it wishes to maintain a relatively low rate of unemployment around 4% in order to generate a steady growth in real wages over consecutive years . Maintaining a regular rate of permanent settlement of 160,00 new migrants (still a high number relative to our population) seems a sensible way of allowing growth in the labor force yet growth in real wages at the same time.


 

Guay Lim

.

190,000 is about right


 

Lisa Magnani

.

190,000 is not enough

Migration has important effects on the Australian economy, society and culture. By adding diversity to our local population along dimensions such as age, ethnicity, race and walks of life we enrich the quality of our living standards. In the face of economies of scale, as in the case of many infrastructure investments such as energy provision, transport and telecommunication, migration lowers the per capita costs of these projects. Factors such as skill and education are important in the context of capital-skill complementarities that drive economic growth. Diseconomies of scale that emerge in the presence of a fixed factor such as land can be reduced by savvy investments in urban planning, infrastructure and transport, and by designing appropriate incentive schemes for regional settlements. The potentially negative impact of a larger workforce on wages is estimated to be small. However, the perception that permanent migration may limit labour market opportunities of Australian workers, and depress wage growth, needs to be addressed with appropriate policies that support inclusive growth.


 

Leslie Martin

.

190,000 is not enough


 

Margaret McKenzie

.

190,000 is not enough

We need an open and nondiscriminatory migrant and refugee intake. The government needs to plan in detail all the aspects of policy which are needed to support that intake which will serve to enrich the Australian economy and society.


 

Flavio Menezes

.

190,000 is about right


 

James Morley

.

190,000 is not enough

Australia benefits from migration and will especially need more net migration as our population ages. Given the cut in allowed levels in 2019-20 and negative net migration in the last couple of years due to COVID, it makes sense to increase the intake well above 190,000. This is less than 1% of the population and, importantly, is not a target for *net* migration, so the effect on total population growth will be less than it might seem. Given low birth rates, but a need for balanced demographics and not too high of a dependency ratio, I suspect Australia should target permanent visas numbers closer to 1.25% of the current population (about 320,000 given a population of 25.7 million).


 

A Abigail Payne

.

190,000 is about right

I appreciate a number makes it simple. Context for the number with meaningful projections for worker shortages across broad occupations etc would better couch immigration policy.


 

Alison Preston

.

190,000 is about right

There is an established literature showing that migration has a positive effect on economic growth. The risks of not returning the target to 190,000 per year is constrained economic growth as a result of skill shortages and shortages of workers in key areas such as nursing; the risks of more than190,000 year are further pressure on housing costs and on existing infrastructure.


 

John Quiggin

.

190,000 is not enough

Doesn?t make much difference in economic terms. But as pandemic has shown restricting movement imposes big costs on people. Justified to save lives, not because we?re worried about traffic congestion or baselessly about jobs.


 

Mala Raghavan

.

190,000 is about right

According to the MYEFO, the Treasurer expects around one million jobs to be created in Australia between October 2021 and mid-2025. Therefore, Australia needs to attract permanent migration to achieve this target, especially young skilled migrants who can find jobs appropriate to their qualifications and skills. At the same time, the local employers need to recognise the migrants? skills. For this, a targeted employer-sponsored migration should be prioritised. More importantly, to achieve population growth, labour force participation and productivity, the attracted skilled migrants should be retained through better career opportunities, work-life balance, quality of life and social capital network.


 

Sue Richardson

.

Less than 160,000

Recent rates of immigration have meant that about 60% of Australia?s population growth has come from migration. I think that this puts social cohesion at risk; puts protection of the natural environment at risk as it drives the ever-expanding urban envelope; and imposes substantial costs of urban congestion on current residents: infrastructure of all types has not kept pace with the expanding population. I think that the rationale for a high level of migration is poorly articulated and centres mainly about the short term economic, including budgetary, impacts. This is a sadly narrow and materialist view of the overall consequences of high migration levels. It is also lazy economic policy. Even on its own terms, there is no evidence of which I am aware that high levels of migration increase GDP per person, as distinct from total GDP. In terms of living standards, it is the per capita measure that matters. And it should be adjusted for increased traffic congestion, urban density and pressures on the health and other important social systems.


 

Leonora Risse

.

190,000 is not enough

It is not possible to make a recommendation on Australia's permanent migration policy with a single number. It doesn't matter what amount we nominate - what matters is that the migration intake is accompanied by an appropriate set of well-designed and supportive policies that enable migrants to best achieve their potential. This involves providing adequate infrastructure and services as our population grows, as well as ensuring fair and inclusive economic opportunities for new migrants, in relation to education, employment, access to business opportunities and other essential services such as safe and affordable housing, and ensuring new migrants have a voice and representation in decision-making. Australia's current demographic circumstances also strongly warrant investment in migration. Australia's birth rate (1.58 babies per woman as at 2020) is well below replacement-rate levels, meaning migration is the key mechanism for replenishing the country's workforce as older generations age. https://www.abs.gov.au/statistics/people/population/births-australia/latest-release I have indicated 190,000 as a minimum, on the basis that higher population growth has the potential to foster greater economic prosperity and wellbeing for all. Migration has brought wide-ranging benefits to our country, including through innovation as well as cultural benefits. https://www.abs.gov.au/statistics/people/population/births-australia/latest-release When considering an upper limit on migration caps, keep in mind that 30% of all Australians were born overseas. For 20% of Australians, one or both of our parents were born overseas. Most of us wouldn't be here in Australia if it weren't for migration. https://www.abs.gov.au/statistics/people/population/migration-australia/latest-release Clearly any population growth policy also needs to be accompanied by well-informed resource sustainability policies, so that higher population growth and economic development does not come at a cost to our natural resources, environment and ecosystem. These dual goals are achievable if we take a holistic approach to policy design and recognise the mix of policies that are required, aiming for "inclusive" and "sustainable" economic prosperity, not just economic growth at any cost.


 

Rana Roy

.

190,000 is about right

190,000 ? the option I have selected ? is not a uniquely determined ?correct? answer to the question of what is the optimal planning level for permanent visas. For there is no uniquely determined correct answer to this question ? as should be obvious from a consideration of the nature of the variables mapped in Figure 2.1 on page 18 of the 2021 Intergenerational Report (IGR). https://cdn.theconversation.com/static_files/files/2011/Extract__Intergenerational_Report.pdf The best that the Commonwealth government can do is to arrive at its best estimate/guesstimate and to communicate it to one and all as clearly as possible. Rather, the point to stress here is this: once the government has agreed its planning level, there is an overwhelming case for maintaining a stable and predictable immigration programme at that agreed level. For this is the necessary condition enabling all other relevant parties both here and overseas ? individuals and households, private firms and government agencies, educational institutions and the various actors in every sub-sector of infrastructure, et al. ? to plan ahead accordingly. Therefore, and re-interpreting the question in this poll as follows, ?Given that Australia maintained a broadly successful immigration programme at a planning level of 190,000 permanent visas per year in the five years to 2018-19, and given that in the 2021 IGR the Government has agreed to return to the planning level of 190,000 per year from 2023-2024, should the Government maintain this level in the coming years??, my answer is ?Yes?.


 

Jeffrey Sheen

.

190,000 is not enough


 

Susan Thorp

.

190,000 is about right

Skilled migration is a key to growth in a naturally aging population.


 

Joaquin Vespignani

.

190,000 is not enough

The number of permanent migrants should increase beyond 190,000 and is critical for sustainable economic growth in Australia. In 2021, the net migration in Australia was a net loss of 88,000, meaning that if the previous level of permanent migration was adequate, the number of permanent visas should increase way above 190,000. According to the RBA, the unemployment rate is expected to fall below 4%, supporting the case for further higher migration intake to ensure there is no labour shortage.